Smart Card technology is currently in use in several industries, including healthcare, banking, entertainment and transportation. A Smart Card is a plastic card similar to a credit card, which is embedded with a computer chip that stores and transacts data between users. This data is associated with either value, information or both, and is stored on the card.
There are two types of Smart Cards, memory cards and microprocessor cards. Memory cards do not have any sophisticated processing power and are incapable of managing files dynamically. There are three primary types memory cards: Straight Memory Cards, Protected/Segmented Memory Cards, and Stored Value Memory Cards. Straight Memory Cards simply store data and have no data processing capabilities, they are analogous to floppy disks of varying sizes. Straight memory cards do not have any mechanism to lock the data; thus anyone with a reader can access the data stored on the card.
Segmented Memory Cards have built-in logic to control user access to the memory of the card. Data stored on such a Smart Card is protected through a password or system key. Segmented Memory Cards can be divided into logical sections to provide for planned multi-functionality of the card.
Stored Value Memory Cards are used for storing value or credits. These cards can be either disposable or rechargeable and usually incorporate permanent security devices such as password keys and logic that are hard-coded into the chip by the manufacturer. The memory on these types of Smart Cards is essentially set up as a counter. For example a telephone card may have twelve memory cells, one for each minute of talk time. One memory cell is cleared each time a minute of telephone talk time is used. Once all twelve memory cells are cleared, no more talk time is available and the card is either discarded or recharged with more talk time.
Microprocessor Cards have on-card dynamic data processing capabilities that permit the combination of multiple applications onto a single card. For example, a single Smart Card can function as an individual's driver's license, their credit card, their phone card and their health insurance card. These multiple-application Smart Cards are usually “co-branded” with the names of each of the individual companies utilizing an application on that Smart Card (i.e. credit card company, phone company, health insurance company, etc).
An important feature of these multi-application Smart Cards is that the information relating to each individual application be kept separate from the other applications, and that the appropriate information only be available for use with its intended application. For instance, the information that is available to a merchant where a purchase is being made should only include the individual's credit card number, and should not include any information necessary to make long distance phone calls or the individual's health insurance information. Each application must be kept separate for security and privacy reasons.
For some time now, Smart Cards have been used in the health insurance industry to help process and settle routine medical claims. The use of the Smart Cards in a health insurance application provides tremendous benefit in being able to simplify and automate eligibility information and co-payment information on the spot. Prior to the use of Smart Cards, a clinic's office staff would make photocopies of a patient's insurance card and call an 800 number to verify coverage. One swipe of a Smart Card connected to an insurer's computer system can provide assurance that the patient is eligible for treatment, the amount of the associated co-pay, and any restrictions in the payment of fees.
Because of the importance of maintaining a separation between multiple applications located on a single Smart Card, the prior art usage of Smart Card technology has been a strictly “horizontal” referencing and updating of information and instructions for each application independently. Currently no system exists for “vertically” combining information from the independent applications of a multiple application Smart Card, or for “vertically” combining information from independent applications of any other card with multi-functionality. For example, a single Smart Card might include multiple applications such as a credit card and a health insurance card. Theoretically, using such a multi-application Smart Card of the prior art, a healthcare subscriber could utilize both the healthcare application and the payment application to allow the provider to obtain both the insurance coverage portion and the patient's co-pay portion for a procedure. Nevertheless, the provider would be required to have appropriate equipment and security codes to access both applications. Additionally, the provider would have to access each application independently, or horizontally. First the provider would have to access the healthcare application to determine policy coverage and amount of co-payment required, and then separately access the payment application to obtain the patient's co-payment. Such would require considerable time and expense to the provider due to equipment needs, paperwork and manpower. Even more time and resources would be utilized if a third application, such as a healthcare line of credit account, is included on the card.
Basically the multiple-application Smart Cards (or any other cards with multi-functionality) of the prior art act only to eliminate the need of the card holder to carry a separate card for each application. Using such a card of the prior art, the card holder can have insurance policy information, healthcare line of credit account information, and credit card information all on a single card. Unfortunately, when the cardholder goes to the doctor's/dentist's office and presents the card, the healthcare provider will be required to perform manually separate checks for each application that is to be utilized. Once the medical/dental procedure is determined, the healthcare provider will need to phone, fax or email the patient's insurance company to determine whether the procedure is covered, and the amount of payment that the provider will be eligible to receive from the insurance company for the procedure. Once the amount of payment to be expected from the insurance company is determined, the provider will then have to independently phone, fax or email the healthcare line of credit company to determine how much payment the provider can expect from that source. Finally, if the insurance company payment amount combined with the line of credit amount is not enough to cover the entire cost of the procedure, the provider must collect the remainder of the costs from the patient. If the patient chooses to pay by credit card, the provider must obtain authorization for credit (holding against a line of credit, also referred to as blocking or reservation of funds) and complete settlement of funds in the traditional manner of usage for a credit card. It would be beneficial if the healthcare provider could avoid the time and expense of performing these multiple checks independently.
Determining the amount of payment to be expected from the insurance company by itself can be a fairly complex procedure based upon a co-pay percentage, co-pay limits and policy limits. For example, a dental policy may have a $3000 yearly policy limit. Additionally, the patient's co-pay might be 20% up to a maximum out-of-pocket of $250. Thus, assume the patient has already had a procedure this year that costs a total of $1000, the insurance company would have paid its 80% or $800, and the patient would have paid its 20% or $200. Now, assume the patient needs to have a procedure for which the total cost is $2000. The insurance company's 80% portion would be $1600, and the patient's 20% portion would be $400. Nevertheless, the patient's maximum out-of-pocket is $250, so the patient only pays $50 for this procedure, and the insurance company pays the additional $350 of the patient's portion of the co-pay. This leaves a total paid by insurance of $1950 for the second procedure, and a yearly total of insurance benefits of $2750. Now assume the patient needs a third procedure that will cost $1000. Because the patient has already met its yearly out-of-pocket amount the insurance company should cover the cost of the entire procedure. But, if the insurance company pays the entire $1000, it will have provided a total yearly benefit of $3750, whereas the policy limit is $3000. Thus, the insurance company will only pay $250 for this third procedure to give a yearly total of $3000. The patient will be responsible for the additional $350 due for the procedure.
As complicated as the above example appears when one knows all the important information such as the co-pay percentage, maximum out-of-pocket, policy limit and the amount of benefits already utilized by the patient, it becomes even more complicated, and sometimes even impossible, to accurately determine the amount of payment to be expected from an insurance company when all of this information is not readily available to the healthcare provider. Often, under the current system, a healthcare provider will only be given part of this information, such as the co-pay percentage and the policy limit. The provider may not have access to the amount of benefits already utilized, thus making it impossible for the provider to determine the amount of payment that can be expected from insurance before the procedure is performed and the claim is processed. Additionally, if the provider does know the amount of benefits already utilized at the time the procedure is performed, and then the provider is required to submit a claim for benefits to the insurance company through the traditional paper form channels, it is possible that another claim could be processed and paid before the provider's claim but after the provider determined the amount of benefits utilized. Such would change the amount of benefits utilized, and could reduce the amount of payment made to the healthcare provider. Thus, it would be beneficial if the healthcare provider could determine the amount of benefits utilized and the amount of payment expected from the insurance company prior to performing the procedure. Additionally, it would be beneficial if the provider could obtain authorization for funds with the insurance company prior to performing the procedure to ensure payment of the full amount determined to be expected.